Think Twice Before Letting Your “Other Half” Move In!

Making the decision to live with your partner is an exciting time. It is a big step, not just emotionally, but also legally.

The law in New Zealand creates a legal arrangement between boyfriends/girlfriends/partners who are in “de facto” relationships. A de facto relationship is where two people live together similar to a married couple. If a couple in a de facto relationship split, the default position under the law is that any relationship property, which often includes the house you will live in together, is to be split 50/50.

Many people believe you have to live together for more than three years for your partner to have a claim. This is not always the case. The law allows parties in de facto relationships of less than three years to make claims in certain circumstances, for example, if you have children together.

Long story short – if you own a house in your personal name and someone you are in a relationship with moves into your house, you could be putting your house at risk. This can also occur where a couple buy a property together, but one person puts in significantly more money towards the property than the other.

Not all property is treated as relationship property, but where a couple live together in a house, that house can be classed as the “family home” and has greater risk of a claim.

Sadly, we see many people at the end of a relationship when the “other half” is now claiming half of the value of the house as relationship property. By that stage, it is usually too late to prevent a claim being made.  This means it is important to think about protecting your assets before you move in together.

To avoid such a situation, you and your partner need to sign a contracting out agreement (“COA”) ideally before you start living together. Yes, this can be awkward to discuss with your partner and yes, it does cost money. However, it is the only way to protect your assets from future claims in the event you separate or die.

Our advice – have the discussion and spend some money early to get the COA in place.

We have also seen situations where couples have tried to prepare their own agreement, but under the law, a “homemade” agreement will not be legally valid.

For a COA to be valid, the law requires:

  • The COA must be in writing;
  • Each party to the COA must have independent legal advice before signing (ie: advice from separate lawyers);
  • The signature to each party must be witnessed by a lawyer;
  • The lawyer who witnesses the signature must certify before signing the agreement that he/she explained to the party the effect and implications of the COA.

Spending the money to get a COA at the right time could potentially save you thousands later down the line.

Written by Brooke Courtney
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